FTA Issues Proposed Procedures to Facilitate Private Investment in Rail and Transit Capital Projects

On July 31, 2017, the Federal Transit Administration (FTA) issued a Notice of Proposed Rulemaking that would establish procedures for the agency to consider and grant regulatory waivers in order to facilitate public-private partnerships (P3s) for, and other private investment in, public transportation rail and transit projects.

Originally mandated by the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. No. 112-141 (July 6, 2012) and further authorized by the Fixing America’s Surface Transportation (FAST) Act, Pub. L. No. 114-94 (Dec. 4, 2015), the FTA’s Private Investment Project Procedures (PIPP) is among the new Administration’s first official steps toward fulfilling its promise of increasing private participation in the transportation sector. Through issuing project-specific waivers and studying their impact on project delivery, the FTA intends to use the PIPP to identify and develop more systematic means of accomplishing this objective.

Eligible projects would be limited to surface transportation capital projects that are subject to 49 U.S.C. chapter 53 and that will be implemented:

• Through a public-private partnership, defined as a contractual agreement formed between a public agency and a private sector entity that is characterized by private sector investment and risk-sharing in the delivery, financing and operation of a project;
• Through a joint development agreement, defined by reference to FTA Circular 7050.1; or
• With other private sector investment (i.e., funding).

Under the PIPP, the FTA would consider applications from any proposed recipient of Federal assistance, including programs under 49 U.S.C. chapter 53 and the popular Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing (RRIF) loan programs, to waive or modify any FTA requirement, regulation, procedure, or mandatory circular provision. The agency may grant such a waiver or modification if it determines:

• The subject requirement discourages the use of a P3 or private sector investment;
• The requested waiver or modification is likely to encourage private sector investment;
• The degree of private sector investment or risk transfer warrants the request; and
• The request can be granted while protecting the public interest and any public investment in the federally assisted public transportation capital project.

The FTA would not have authority under the proposed rule to modify or waive a statutory requirement.

Comments on the proposed rule are due by September 29, 2017. Please do not hesitate to contact us for further information, or for assistance in developing comments on the FTA’s proposed PIPP.